Shorting the yen has earned George Soros more than $1 billion in profits since November.

Now Soros has set his sights on the second-most-shorted currency in the world – the British pound.

And he may have company, as the Financial Times reports: Along with Soros Fund Management, Tudor Investment Corp., Caxton Associates and Moore Capital – some of the best global macro traders – "see similarities in UK's predicament to that of Japan" and are interested in shorting the pound.

This adds to worries about the pound, which has already fallen 5% this year. And with exports falling, productivity low, and gross domestic product shrinking last quarter, Britain's economic outlook is foggy at best.

"There could be a dramatic weakening of the pound this year," one of the world's top macro hedge fund managers, who declined to be named because he does not want his firm's positions becoming public, told the FT.

For Britain's sake, let's hope that weakening doesn't lead to another "Black Wednesday," Sept. 16, 1992 – the day George Soros "broke" the Bank of England.

How Soros Broke the Bank of England

Sept. 16 is the day Soros profited more than $1 billion by shorting the pound.

Technically, the Bank of England didn't break, but by short-selling $10 billion worth of pounds, Soros forced the British government to withdraw the pound from the European Exchange Rate Mechanism (ERM) – a monetary system introduced in 1979 in preparation for the current European Union and use of the euro.

Soros saw the inflationary actions of the British government and the structure of the ERM had caused the pound to be overvalued.

Now there are once again concerns over the pound's valuation, stemming from the appointment of Mark Carney, the current Bank of Canada governor, as the next governor of the Bank of England.

Editor's Note: George Soros is one of the most storied currency speculators in history. But Money Map Press Chief Investment Strategist Keith Fitz-Gerald was fully eight months ahead of him (and other hedge-fund heavyweights) in identifying this latest currency profit opportunity: the yen.

According to the Wall Street Journal, betting against the Japanese currency "has emerged as the hottest trade on Wall Street over the past three months." That’s when Soros shorted the yen – in November 2012.

But it was February of 2012 when Keith told my Private Briefing subscribers that the yen was headed for big fall – and he even recommended an ETF that would let them profit from his prediction.

The upshot: Keith's recommendation has so far reaped a 44% windfall – which is more than double the 20% yen decline the hedge-fund Johnny-come-latelies have been able to profit on. And there's more to come.

No question Soros is an investing legend. But this time around, Keith was ahead of Wall Street's biggest players. And thanks to him, so were you.

If you would like to join the thousands of investors Private Briefing has already helped to make big money in the markets, you can do it for just 26 cents a day. I'm proud to say that in a little over a year, we've had more than four dozen winners, including four that have doubled and two that have tripled in price. Click here to learn more.

Why It's Time to Short the British Pound

Investors expect Britain to have annual inflation higher than 3.2 % over the next decade – the highest among major economies.

And Carney, who will replace Sir Mervyn King as governor of the BOE in July, said he will allow higher inflation than his predecessor.

The BOE's Monetary Policy Committee also supported higher inflation targets in its February inflation report.

"Attempting to bring inflation back to the target sooner by removing the current policy stimulus more quickly than currently anticipated by financial markets would risk derailing the recovery and undershooting the inflation target in the medium term," the MPC said in the report.

Yet, traders fear Carney will pump too much stimulus into the economy, raising inflation and devaluing the pound even more.

"[Hedge funds] are now looking very closely at what they can do with sterling," Rob Kaplan, chief investment officer of Permal, one of the world's largest investors in hedge funds, told the Financial Times. "With Carney coming in, there are interesting opportunities [either] shorting sterling or going long volatility on sterling."

The best way to short the pound is through options, which can be done in the FOREX market, a global market that deals only with currencies and currency contracts.

There's also the CurrencyShares British Pound ETF (NYSE: FXB), which tracks the pound.

And besides shorting the pound, or sterling, another way to play its negativity is with inflation-linked bonds.

"I'd lean towards further weakness in sterling and appetite for inflation-linked bonds," a senior government bond trader at a U.S. bank told the Financial Times. "The clearest trade for me is for a steepening of yields."

Why do you say 'the best way' to short the £ is through options, if you don't specify what criteria you're using? Are you assuming options offer the 'best way' because of a risk/reward strategy that you have? If so, what is it? How do you know that spread-betting the £ is not the best way to short the £ for leveraged players?

I heard that George Soros was in st.barths and was discussing at diner his belief that the euro would be declining dramatically in the first half of 2013. When I saw the trend over the past two weeks and spike in volitity I was wondering if he is at it again.

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